More feds investing in TSP's L Funds

May. 20, 2013 - 06:00AM
|

Gregory Long is executive director of the Thrift Savings Plan. (Tom Brown/Staff)

ADVERTISEMENT

The number of Thrift Savings Plan participants enrolled in the L, or lifecycle, Funds reached a record 864,469 in April.

And the L Funds’ growth rate is accelerating. The number of L Fund enrollees grew 5 percent in the first four months of 2013 — greater than the 4 percent growth the L Funds experienced in all of 2012. Between December 2011 and December 2012, the number of L Fund participants grew from 788,326 to 821,082.

The L Funds are mixtures of TSP’s five underlying funds that are automatically adjusted based on how close or far an investor is from retirement. Participation in those funds dropped several times during the market crash and recession in late 2008 and early 2009, as many TSP investors sought shelter in the low-risk, low-reward G Fund. But L Fund participation has gradually grown since late 2009, as participants regained their confidence, and picked up the pace in recent months.

TSP participants are also shifting more and more money into the L Funds. Last month, TSP participants moved $468 million into the L Funds, largely out of the stock-based C, S and I funds. So far this year, about $2.8 billion has been transferred into the L Funds, bringing its total balance to nearly $53 billion. That is roughly 15 percent of the TSP’s total $352 billion balance.

This growth “is what success looks like,” Gregory Long, executive director of the Federal Retirement Thrift Investment Board, said at the board’s monthly meeting Monday. “This is a trend that we’d like to see continue.”

The TSP board has for years encouraged participants to invest in the L Funds. Long said he could not be sure exactly what is causing the explosion of interest in the L Funds, but said he hopes the board’s continued advocacy is starting to yield results.

Chief Investment Officer Tracey Ray said that so far in May, participants have moved about $476 million into the L Funds.

“It seems to be a very steady trend,” Ray said. “It’s a very different picture from what last year looked like.”